<PAGE>

                                    UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549

                                  -----------------
                                          
                                     Form 10-Q

[ X ]     Quarterly report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

                  FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1998
 OR

[   ]     Transition report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

                        Commission File Number:   001-11807

                          -------------------------------

                                 UNIFY  CORPORATION
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          Delaware                                        94-2710559
-------------------------------                -------------------------------
(STATE OR OTHER JURISDICTION OF                (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION)                               NUMBER)

                        100 CENTURY CENTER COURT, SUITE 302
                            SAN JOSE, CALIFORNIA  95112
                      (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                          
                             TELEPHONE:  (408) 451-2000
                (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                        YES     X              NO           
                              -----                 -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

    8,469,336  shares of Common Stock, $0.001 par value, as of November 30, 1998


<PAGE>

                                 UNIFY CORPORATION
                                     FORM 10-Q
                                          
                                       INDEX

<TABLE>
<CAPTION>
                                                                           PAGE
                                                                          NUMBER
                                                                          ------
<S>                                                                       <C>
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheets as of
              October 31, 1998 and April 30, 1998. . . . . . . . . . . . .    3

          Condensed Consolidated Statements of Operations for
              the three and six months ended October 31, 1998 
              and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . .    4

          Condensed Consolidated Statements of Cash Flows
              for the six months ended October 31, 1998 and 1997 . . . . .    5

          Notes to Condensed Consolidated Financial Statements . . . . . .    6

Item 2.   Management's Discussion and Analysis of
              Financial Condition and Results of Operations. . . . . . . .    8


PART II.  OTHER INFORMATION

Item 4.   Submission of Matters to a Vote of Security Holders. . . . . . .   14

Item 5.   Other Information. . . . . . . . . . . . . . . . . . . . . . . .   14

Item 6.   Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . .   15


SIGNATURE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
</TABLE>



                                       2

<PAGE>

PART I.   FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS


                                 UNIFY CORPORATION
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (IN THOUSANDS)
                                          
<TABLE>
<CAPTION>
                                                  October 31,      April 30,
                                                      1998            1998
                                                  -----------      ---------
<S>                                               <C>              <C>
ASSETS                                            (unaudited)      (audited)
Current assets:
   Cash and cash equivalents                        $  6,049       $  5,279
   Short-term investments                              4,300          5,460
   Accounts receivable, net                            5,679          5,568
   Prepaid expenses and other current assets             759            779
                                                    --------       --------
      Total current assets                            16,787         17,086

Property and equipment, net                            1,723          1,925
Other assets                                              78             88
                                                    --------       --------
      Total assets                                  $ 18,588       $ 19,099
                                                    --------       --------
                                                    --------       --------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt                $      -       $     18
   Accounts payable                                    1,268          1,041
   Amounts due to minority interest stockholders         615            756
   Accrued compensation and related expenses           1,682          1,889
   Other accrued liabilities                           2,750          3,076
   Deferred revenue                                    2,542          3,745
                                                    --------       --------
      Total current liabilities                        8,857         10,525

Long-term debt, net of current portion                     -              4
Minority interest                                        248            275

Stockholders' equity:
   Common stock                                            8              8
   Additional paid-in capital                         53,594         53,474
   Notes receivable from stockholders                   (221)          (216)
   Cumulative translation adjustments                   (562)          (521)
   Accumulated deficit                               (43,336)       (44,450)
                                                    --------       --------
      Total stockholders' equity                       9,483          8,295
                                                    --------       --------
      Total liabilities and stockholders' equity    $ 18,588       $ 19,099
                                                    --------       --------
                                                    --------       --------
</TABLE>





       See accompanying notes to condensed consolidated financial statements.
                                          
                                         3

<PAGE>

                                 UNIFY CORPORATION
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                    (UNAUDITED)
                                          
                                          

<TABLE>
<CAPTION>
                                            Three Months Ended              Six Months Ended
                                                 October 31,                    October 31,
                                           ----------------------        ----------------------
                                             1998           1997           1998           1997
                                           -------        -------        -------        -------
<S>                                        <C>            <C>            <C>            <C>
Revenues:
   Software licenses                       $ 4,726        $ 3,994        $ 8,968        $ 6,863
   Services                                  2,474          2,270          4,892          4,535
                                           -------        -------        -------        -------
      Total revenues                         7,200          6,264         13,860         11,398
                                           -------        -------        -------        -------

Cost of revenues:
   Software licenses                           236            130            462            363
   Services                                  1,074          1,143          2,127          2,224
                                           -------        -------        -------        -------
      Total cost of revenues                 1,310          1,273          2,589          2,587
                                           -------        -------        -------        -------

Gross margin                                 5,890          4,991         11,271          8,811
                                           -------        -------        -------        -------

Operating expenses:
   Product development                       1,484          1,526          2,933          2,974
   Selling, general and administrative       3,606          4,296          7,259          8,856
                                           -------        -------        -------        -------
      Total operating expenses               5,090          5,822         10,192         11,830
                                           -------        -------        -------        -------

      Income (loss) from operations            800           (831)         1,079         (3,019)
Other income, net                              100            141            123            201
                                           -------        -------        -------        -------
      Income (loss) before income taxes        900           (690)         1,202         (2,818)
Provision for income taxes                     (44)           (43)           (88)           (90)
                                           -------        -------        -------        -------
      Net income (loss)                    $   856        $  (733)       $ 1,114        $(2,908)
                                           -------        -------        -------        -------
                                           -------        -------        -------        -------

Net income (loss) per share,
basic and diluted                          $  0.10        $ (0.09)       $  0.13        $ (0.35)
                                           -------        -------        -------        -------
                                           -------        -------        -------        -------

Shares used in computing net
income (loss) per share:
   Basic                                     8,435          8,252          8,414          8,201
                                           -------        -------        -------        -------
                                           -------        -------        -------        -------
   Diluted                                   8,547          8,252          8,538          8,201
                                           -------        -------        -------        -------
                                           -------        -------        -------        -------
</TABLE>

        See accompanying notes to condensed consolidated financial statements.

                                          4

<PAGE>

                                  UNIFY CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (IN THOUSANDS)
                                     (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 Six Months Ended October 31,
                                                                 ----------------------------
                                                                      1998          1997
                                                                 ----------        -------
<S>                                                              <C>               <C>
Cash flows from operating activities:
   Net income (loss)                                                $ 1,114        $(2,908)
   Reconciliation of net income (loss) to net cash used
   in operating activities:
      Depreciation                                                      554            530
      Provision for losses on accounts receivable                       181             80
      Minority interest                                                 (27)           (37)
      Liquidation of Benelux subsidiary                                   -            136
      Changes in operating assets and liabilities:
         Accounts receivable                                            (84)           388
         Prepaid expenses and other current assets                       32            117
         Accounts payable                                               188           (457)
         Amounts due to minority interest stockholders                 (198)           (19)
         Accrued compensation and related expenses                     (239)           (34)
         Other accrued liabilities                                     (359)          (790)
         Deferred revenue                                            (1,288)          (293)
                                                                 ----------        -------
            Net cash used in operating activities                      (126)        (3,287)
                                                                 ----------        -------

Cash flows from investing activities:
   Net sales of available-for-sale securities                         1,160          1,689
   Purchases of property and equipment                                 (344)          (430)
   Other assets                                                          12            168
                                                                 ----------        -------
            Net cash provided by investing activities                   828          1,427
                                                                 ----------        -------

Cash flows from financing activities:
   Principal payments under debt obligations                            (22)        (2,298)
   Proceeds from issuance of common stock, net                          211            331
   Repurchase of common stock                                           (91)             -
   Accrual of interest on notes receivable from stockholders             (5)            (5)
                                                                 ----------        -------
            Net cash provided by (used in) financing activities          93         (1,972)
                                                                 ----------        -------

Effect of exchange rate changes on cash                                 (25)           (62)
                                                                 ----------        -------
Net increase (decrease) in cash and cash equivalents                    770         (3,894)
Cash and cash equivalents, beginning of period                        5,279          9,513
                                                                 ----------        -------
Cash and cash equivalents, end of period                             $6,049         $5,619
                                                                 ----------        -------
                                                                 ----------        -------

Supplemental schedule of noncash investing and financing
 activities:
Cash paid during the period for:
   Interest                                                          $   81         $  274
                                                                 ----------        -------
                                                                 ----------        -------
   Income taxes                                                      $   54         $   80
                                                                 ----------        -------
                                                                 ----------        -------
</TABLE>


        See accompanying notes to condensed consolidated financial statements.

                                          5

<PAGE>

                                  UNIFY CORPORATION
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

     The condensed consolidated financial statements have been prepared by Unify
Corporation (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC").  While the interim financial
information contained in this filing is unaudited, such financial statements
reflect all adjustments (consisting only of normal recurring adjustments) which
the Company considers necessary for a fair presentation.  The results for
interim periods are not necessarily indicative of the results to be expected for
the entire fiscal year.  These financial statements should be read in
conjunction with the Consolidated Financial Statements and Notes thereto,
together with Management's Discussion and Analysis of Financial Condition and
Results of Operations, which are included in the Company's Annual Report on Form
10-K for the year ended April 30, 1998 as filed with the SEC.


2.   EARNINGS PER SHARE

     The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the periods indicated:


<TABLE>
<CAPTION>
                                                         Three Months Ended           Six Months Ended
                                                             October 31,                  October 31,
                                                      ---------------------------------------------------
                                                        1998          1997           1998           1997
                                                      ------        -------         ------        -------
<S>                                                   <C>           <C>             <C>           <C>
NET INCOME (LOSS)  (NUMERATOR):
Net income (loss), basic and diluted                  $  856        $  (733)        $1,114        $(2,908)
                                                      ------        -------         ------        -------
                                                      ------        -------         ------        -------

SHARES  (DENOMINATOR):
Weighted average shares of common
   stock outstanding, basic                            8,435          8,252          8,414          8,201
Weighted average common equivalent
   shares outstanding                                    112              -            124              -
                                                      ------        -------         ------        -------
Weighted average shares of common
   stock outstanding, diluted                          8,547          8,252          8,538          8,201
                                                      ------        -------         ------        -------
                                                      ------        -------         ------        -------

PER SHARE AMOUNT:
Net income (loss) per share,
   basic and diluted                                  $ 0.10        $ (0.09)        $ 0.13        $ (0.35)
                                                      ------        -------         ------        -------
                                                      ------        -------         ------        -------

ANTIDILUTIVE SHARES:                                     528            544            533            694
                                                      ------        -------         ------        -------
                                                      ------        -------         ------        -------
</TABLE>


                                         6

<PAGE>

                                 UNIFY CORPORATION
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


3.   COMPREHENSIVE INCOME

     Effective May 1, 1998, the Company adopted Statement of Financial 
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income."  
This statement requires that all items recognized under accounting standards 
as components of comprehensive income be reported in an annual financial 
statement that is displayed with the same prominence as other annual 
financial statements. This statement also requires that an entity classify 
items of other comprehensive income by their nature in an annual financial 
statement.  For example, other comprehensive income includes foreign currency 
translation adjustments.  Annual financial statements for prior periods will 
be reclassified, as required.  The Company's total comprehensive income 
(loss) was as follows:

<TABLE>
<CAPTION>
                                                        Three Months Ended            Six Months Ended
                                                            October 31,                  October 31,
                                                        -------------------         ---------------------
                                                        1998           1997           1998           1997
                                                        ----          -----         ------        -------
<S>                                                     <C>           <C>           <C>           <C>
Net income (loss)                                       $856          $(733)        $1,114        $(2,908)
Other comprehensive income (loss),
   net of tax                                            (75)            (8)           (41)            63
                                                        ----          -----         ------        -------
Total comprehensive income (loss)                       $781          $(741)        $1,073        $(2,845)
                                                        ----          -----         ------        -------
                                                        ----          -----         ------        -------
</TABLE>


4.   STOCK REPURCHASE PROGRAM

     In September 1998, the Company announced that its Board of Directors had
authorized the repurchase of up to 500,000 of its outstanding common shares. 
During the second quarter of fiscal 1999, 32,500 common shares were reacquired
under this program at an average price of $2.80.


5.   NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."  This statement
establishes accounting and reporting standards for derivative instruments and
hedging activities.  This statement is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999.  The Company has not yet determined
the impact of SFAS No. 133 on the Company's financial statements.


                                         7
<PAGE>

                                 UNIFY CORPORATION

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     THE DISCUSSION IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS 
FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF 
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.  SUCH FORWARD-LOOKING 
STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT 
THE SOFTWARE INDUSTRY AND CERTAIN ASSUMPTIONS MADE BY THE COMPANY'S 
MANAGEMENT.  WORDS SUCH AS "ANTICIPATES", "EXPECTS", "INTENDS", "PLANS", 
"BELIEVES", "SEEKS", "ESTIMATES", VARIATIONS OF SUCH WORDS AND SIMILAR 
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS.  THESE 
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO 
CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT;  
THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR 
FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS.  SUCH RISKS AND 
UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THOSE SET FORTH HEREIN UNDER 
"VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY 
RESULTS" AND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K UNDER "BUSINESS - 
RISK FACTORS."  UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION 
TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW 
INFORMATION, FUTURE EVENTS OR OTHERWISE.  HOWEVER, READERS SHOULD CAREFULLY 
REVIEW THE RISK FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS THE COMPANY 
FILES FROM TIME TO TIME WITH THE SEC, PARTICULARLY THE COMPANY'S ANNUAL 
REPORTS ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q AND ANY CURRENT REPORTS 
ON FORM 8-K.

     The following discussion should be read in conjunction with the 
unaudited Condensed Consolidated Financial Statements and Notes thereto in 
Part I, Item 1 of this Quarterly Report on Form 10-Q and with the audited 
Consolidated Financial Statements and Notes thereto, together with 
Management's Discussion and Analysis of Financial Condition and Results of 
Operations, which are included in the Company's Annual Report on Form 10-K 
for the year ended April 30, 1998 as filed with the SEC.

RESULTS OF OPERATIONS

REVENUES

     The Company's strategy focuses on the marketing and enhancement of its
graphical product, Unify VISION.  The Company continues to support its installed
base of character products, which the Company believes represents a significant
source of potential customers for Unify VISION.  The Company also generates a
significant portion of its revenues from services, including customer
maintenance, consulting and training. The following table sets forth revenues
from licenses of its graphical and character products and from services for the
periods indicated:


                                       8
<PAGE>


                              UNIFY CORPORATION

<TABLE>
<CAPTION>
                                           Three Months Ended              Six Months Ended
                                               October 31,                   October 31,
                                          ---------------------        ----------------------
                                           1998           1997           1998           1997  
                                          -------       -------        -------        -------
<S>                                       <C>           <C>            <C>            <C>     
License revenues:
   Graphical                              $2,719         $2,008        $ 4,869        $ 3,265
   Character                               2,007          1,986          4,099          3,598
                                          -------       -------        -------        -------
      Total license revenues               4,726          3,994          8,968          6,863
Services revenues                          2,474          2,270          4,892          4,535
                                          -------       -------        -------        -------
      Total revenues                      $7,200         $6,264        $13,860        $11,398
                                          -------       -------        -------        -------
                                          -------       -------        -------        -------
</TABLE>

     Total revenues for the three and six months ended October 31, 1998 
increased 15% and 22%, respectively, over the same periods of the prior year. 
License revenues from graphical products for the three and six months ended 
October 31, 1998 were 35% and 49% higher, respectively, than for the same 
periods of the prior year, reflecting increased customer acceptance of those 
products.  Because of factors such as those described in "Volatility of Stock 
Price and General Risk Factors Affecting Quarterly Results," there can be no 
assurance that the Company will be able to maintain the same level of 
graphical product license revenues as recorded for the quarter ended October 
31, 1998. License revenues from character products were comparable at $2 
million in each of the quarters ended October 31, 1998 and 1997.  Character 
license revenues for the six months ended October 31, 1998 increased 14% over 
the same period of the prior year due to the timing of certain larger orders. 
Service revenues for the three and six months ended October 31, 1998 
increased 9% and 8%, respectively, over the same periods of the prior year 
due to an increase in customer maintenance contracts associated with higher 
license revenues in the fiscal 1999 periods.

     International revenues increased to 56% and 54% of total revenues in the 
three and six months ended October 31, 1998 from 47% and 49% of total 
revenues in the three and six months ended October 31, 1997.  European 
revenues were unusually strong during the fiscal 1999 periods, primarily due 
to improved penetration of Unify VISION into VAR accounts as a result of a 
renewed focus on those accounts which began in the fourth quarter of fiscal 
1998.

COST OF REVENUES

     Cost of software licenses represented 5% of software license revenues 
for the three and six months ended October 31, 1998 and were comparable to 
cost of software licenses in the same periods of the prior year.

     Cost of services for the three and six months ended October 31, 1998 
decreased 6% and 4% compared to the same periods of the prior year, primarily 
due to temporarily lower headcount in the U.S. customer maintenance 
organization during the first half of fiscal 1999.  Cost of services for the 
three and six months ended October 31, 1998 decreased as a percentage of 
service revenues to 43% from approximately 50% in the same periods of the 
prior year primarily due to higher service revenues and lower service costs 
in the fiscal 1999 periods. Within total services, the mix of customer 
maintenance and consulting and training revenues and expenses were relatively 
stable in the second quarter and first six months of fiscal 1999 as compared 
with the same periods of the prior year. 


                                       9
<PAGE>

                                 UNIFY CORPORATION

PRODUCT DEVELOPMENT

     Product development expenses for the quarters ended October 31, 1998 and 
1997 were comparable at $1.5 million and represented 21% and 24% of total 
revenues for those periods.  Product development expenses for the six months 
ended October 31, 1998 and 1997 were also stable at approximately $3.0 
million and represented 21% and 26% of total revenues for those periods.  The 
decreases in product development expenses as a percentage of total revenues 
were due to the growth in license revenues during the fiscal 1999 periods as 
compared to the same periods of the prior year.  The Company believes that 
substantial investment in product development is critical to maintaining 
technological leadership and therefore intends to continue to devote 
significant resources to product development.

SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative ("SG&A") expenses for the quarter 
ended October 31, 1998 decreased to $3.6 million, or 50% of total revenues, 
as compared to $4.3 million, or 69% of total revenues, for the same quarter 
of the prior year.  SG&A expenses for the six months ended October 31, 1998 
decreased to $7.3 million, or 52% of total revenues, as compared to $8.9 
million, or 78% of total revenues, for the same period of the prior year.  
Fiscal 1999 SG&A expenses decreased in absolute dollars compared to the same 
periods of the prior year primarily due to a cost control program which began 
in the second quarter of fiscal 1998 and included lower headcount and a 
flattening of the management structure in sales, marketing and finance.  The 
decreases in SG&A expenses as a percentage of total revenues were 
attributable to the decreases in absolute dollars as well as to the increase 
in fiscal 1999 license revenues as compared to the same periods of the prior 
year.  The Company expects that total SG&A expenses will fluctuate from 
quarter to quarter primarily because of variability in marketing program 
spending and sales commission expense.

PROVISION FOR INCOME TAXES

     The Company recorded tax provisions for the three and six months ended 
October 31, 1998 and 1997 which related primarily to foreign income tax 
withholding on software license royalties paid to the Company by certain 
foreign licensees.  For the same periods, the Company recorded no federal or 
state income tax provisions as the Company had substantial net operating loss 
carryforwards.

YEAR 2000 COMPLIANCE

INTRODUCTION

     Many of the world's computer systems currently record years in a 
two-digit format.  Such computer systems will be unable to properly interpret 
dates beyond the year 1999, which could lead to business disruption (the 
"Year 2000" issue).

                                       10

<PAGE>

                                 UNIFY CORPORATION

STATE OF READINESS

     The Company believes that its current products are fully Year 2000 
compliant.  All current Unify products use four digit years for all internal 
manipulations and representations.  The Company has informed its customers 
that it will be phasing out support for certain older versions of Unify 
products that are not Year 2000 compliant by December 15, 1999.  However, 
there can be no assurance that the Company's products will function properly 
with other potentially non-compliant products, including third party software 
and hardware. Additionally, there can be no assurance that the Company's 
products contain or will contain all features and functionality considered 
necessary by customers, distributors, resellers and system integrators to be 
Year 2000 compliant.  If Unify's products cannot manage and manipulate data 
related to the Year 2000, the result could be a material adverse effect on 
the Company's business.

     The Company sought to identify all significant internal applications and 
business processes that would require modification to ensure Year 2000 
compliance during fiscal 1996 and believes that, with the exception of its 
accounting systems and certain older equipment and software, all appropriate 
modification and testing of those applications and processes were completed 
by the end of fiscal 1997.  With regard to its accounting systems, the 
reprogramming necessary for Year 2000 compliance has been identified and is 
underway; the Company expects that reprogramming and testing of these systems 
will be complete by the end of fiscal 1999.  With regard to the older 
equipment and software, primarily personal computers and related software, 
upgrades and replacements have been identified and are in the process of 
being ordered and installed.  The Company expects that installation and 
testing of new equipment and software will be complete by the end of fiscal 
1999.  However, no assurance can be given that the Company will not 
experience unanticipated material costs caused by undetected errors or 
defects in its internal systems.

     An assessment of the readiness of significant suppliers and service 
providers with which the Company electronically interacts is ongoing.  To 
date, the Company is not aware of any significant supplier or service 
provider with a Year 2000 issue that would materially impact the Company's 
business, operating results or financial condition.  However, the Company has 
no means of ensuring that suppliers and service providers will be Year 2000 
compliant.  The inability of suppliers and service providers to complete 
their Year 2000 resolution process in a timely fashion could materially and 
adversely impact the Company.

COSTS

     The costs incurred in addressing the Year 2000 issue are being expensed 
as incurred in compliance with generally accepted accounting principles.  The 
total cost to date of these Year 2000 compliance activities is approximately 
$400,000 and the cost of future Year 2000 compliance activities is estimated 
to be $500,000.  Funding of these costs will come from existing cash 
resources and future operating cash flows.

RISKS

     The Company believes that the purchasing patterns of customers and 
potential customers may be affected by the Year 2000 issue in a variety of 
ways. Many companies are expending 

                                       11

<PAGE>

                                 UNIFY CORPORATION


significant resources to correct their current software systems for Year 2000 
compliance.  These expenditures may result in reduced funds available to 
purchase enterprise application software products such as those offered by 
the Company.  The impact of the foregoing on the Company's business, 
operating results and financial condition is not determinable.

CONTINGENCY PLANS

     The Company currently expects that the Year 2000 issue will not pose 
significant internal operational problems.  However, a delay in implementing 
new information systems, or a failure to fully identify all Year 2000 
dependencies in Unify's internal systems or in the systems of the Company's 
suppliers and service providers could have material adverse consequences, 
including delays in the delivery of products.  Therefore, the Company is 
developing contingency plans for continuing operations should these types of 
problems arise.  The Company believes that its contingency plans will be 
complete and tested by the end of fiscal 1999.

VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS

     The Company's common stock price has been and is likely to continue to 
be subject to significant volatility.  A variety of factors could cause the 
price of the Company's common stock to fluctuate, perhaps substantially, 
including: announcements of developments related to the Company's business; 
fluctuations in the Company's quarterly operating results and order levels; 
general conditions in the computer industry or the worldwide economy; 
announcements of technological innovations; new products or product 
enhancements by the Company or its competitors; changes in financial 
estimates by securities analysts; developments in patent, copyright or other 
intellectual property rights; and developments in the Company's relationships 
with its customers, distributors and suppliers.  In addition, in recent years 
the stock market in general, and the market for shares of equity securities 
of many high technology companies in particular, has experienced extreme 
price fluctuations which have often been unrelated to the operating 
performance of those companies.  Such fluctuations may adversely affect the 
market price of the Company's common stock.

     The Company's quarterly operating results have varied significantly in 
the past, and the Company expects that its operating results are likely to 
vary significantly from time to time in the future.  Such variations result 
from, among other factors, the following:  the size and timing of significant 
orders and their fulfillment; demand for the Company's products; the number, 
timing and significance of product enhancements and new product announcements 
by the Company and its competitors; ability of the Company to attract and 
retain key employees; seasonality; changes in pricing policies by the Company 
or its competitors; realignments of the Company's organizational structure; 
changes in the level of the Company's operating expenses; changes in the 
Company's sales incentive plans; budgeting cycles of the Company's customers; 
customer order deferrals in anticipation of enhancements or new products 
offered by the Company or its competitors; product life cycles; product 
defects and other product quality problems; the results of international 
expansion; currency fluctuations; and general domestic and international 
economic and political conditions. Because a significant portion of the 
Company's

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<PAGE>

                                 UNIFY CORPORATION


revenues have been, and the Company believes will continue to be, derived 
from orders ranging in size from several hundred thousand dollars to 
approximately $1 million, the timing of such orders and their fulfillment has 
caused and is expected to continue to cause material fluctuations in the 
Company's operating results, particularly on a quarterly basis.

     Due to the foregoing factors, quarterly revenues and operating results 
are difficult to forecast.  Revenues are also difficult to forecast because 
the market for client/server and Internet application development software is 
rapidly evolving, and the Company's sales cycle, from initial evaluation to 
purchase and the provision of maintenance services, is lengthy and varies 
substantially from customer to customer.  In particular, with the fiscal 1997 
release of Unify VISION 3.0 and VISION/Web as well as the May 1998 release of 
VISION 4.0, the Company has experienced new opportunities to compete for 
larger, enterprise-level sales transactions.  These transactions have even 
longer sales cycles than the Company has experienced in the past.  Because 
the Company normally ships products within a short time after it receives an 
order, it typically does not have any material backlog.  As a result, to 
achieve its quarterly revenue objectives, the Company is dependent upon 
obtaining orders in any given quarter for shipment in that quarter.  
Furthermore, because many customers place orders toward the end of a fiscal 
quarter, the Company generally recognizes a substantial portion of its 
revenues at the end of a quarter.  As the Company's expense levels are based 
in significant part on the Company's expectations as to future revenues and 
are therefore relatively fixed in the short term, if revenue levels fall 
below expectations operating results are likely to be disproportionately 
adversely affected.

     The Company also expects that its operating results will be affected by 
seasonal trends.  The Company believes that, in general, it is likely it will 
experience relatively higher revenues in fiscal quarters ending April 30 and 
relatively lower revenues in fiscal quarters ending July 31 as a result of 
efforts by its direct sales force to meet fiscal year-end sales quotas.  The 
Company also anticipates that it may experience relatively weaker demand in 
fiscal quarters ending July 31 and October 31 as a result of reduced business 
activity in Europe during the summer months.

     In particular, due to the foregoing factors and due to longer sales 
cycles associated with Unify VISION 4.0, the operating results of the Company 
for the quarter ending January 31, 1999 are subject to significant 
uncertainty.  The Company has incurred net losses in four of the last eight 
fiscal quarters and in each of the last five fiscal years.  Although the 
Company recorded small operating profits in each of the four quarters ended 
October 31, 1998, there can be no assurance regarding the Company's continued 
profitability.

LIQUIDITY AND CAPITAL RESOURCES

     At October 31, 1998, the Company had cash, cash equivalents and 
short-term investments of $10.3 million, compared to $10.7 million at April 
30, 1998. Working capital increased to $7.9 million at October 31, 1998 from 
$6.6 million at April 30, 1998.

     The Company's operating activities used cash of $0.1 million during the 
six months ended October 31, 1998.  Investing activities during the period 
generated cash of $0.8 million, consisting principally of net sales of short 
term investments of $1.2 million offset by equipment 

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<PAGE>

                                 UNIFY CORPORATION


purchases of $0.3 million.  Cash provided by financing activities during the
period was $0.1 million, representing primarily proceeds of $0.2 million from
the issuance of common stock offset by the acquisition of $0.1 million in common
stock under the Company's stock repurchase program.

     The Company believes that current cash, cash equivalents and short-term 
investments will be sufficient to meet its cash requirements during the next 
12 months.  Thereafter, depending on its operating results, the Company may 
require additional equity or debt financing to meet its working capital or 
capital equipment requirements.  There can be no assurance that additional 
financing will be available when required or, if available, that it will be 
on terms satisfactory to the Company.

PART II.  OTHER INFORMATION

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          At the annual meeting of the Company's stockholders held on October 2,
          1998, the following matters were voted upon:

          1.   The election of each of the nominees for director were approved
               with the following votes:

                                        In Favor      Withheld  
                                        ---------     --------  
               Reza Mikailli            7,255,192      16,110
               Arthur C. Patterson      7,252,516      16,786
               Roel Pieper              7,256,009      15,293
               Steven D. Whiteman       7,256,009      15,293

          2.   The appointment of Deloitte & Touche LLP as the Company's
               independent accountants for the fiscal year ending April 30,
               1999. Of the total shares voting on the foregoing resolution,
               7,262,021 voted in favor, 2,100 voted against, and 7,181
               abstained.

ITEM 5.   OTHER INFORMATION

          Gary Pado, Corporate Controller, was named Vice President, Finance,
          and Chief Financial Officer effective November 16, 1998.


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<PAGE>

                                 UNIFY CORPORATION


          Jeremy Jackson, Managing Director, Europe and International Sales, 
          was named Vice President, Europe and International Operations 
          effective November 16, 1998.

          Roel Pieper, Director, resigned his position effective November 17, 
          1998 due to a change in employment which resulted in his  
          relocation to Europe.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits
               Exhibit 10.1   Employment Agreement by and between
                              Reza Mikailli and the Registrant dated
                              May 1, 1998
               Exhibit 27     Financial Data Schedule


          (b)  Reports on Form 8-K
               The Company filed no reports on Form 8-K during the quarter
               ended October 31, 1998.


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<PAGE>

                                 UNIFY CORPORATION

                                     SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.


Date:   December 15, 1998          Unify Corporation
                                   (REGISTRANT)



                                   By:


                                   Gary Pado
                                   -------------------------------------------
                                   Gary Pado
                                   Vice President, Finance, and Chief Financial 
                                   Officer (Principal Financial and Accounting 
                                   Officer)


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